Comparing OSI Systems (NASDAQ:OSIS) and Microchip Technology (NASDAQ:MCHP)

Microchip Technology (NASDAQ:MCHP) and OSI Systems (NASDAQ:OSIS) are both computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.

Profitability

This table compares Microchip Technology and OSI Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Microchip Technology	14.22%	19.47%	8.10%
OSI Systems	8.31%	18.17%	7.72%

Volatility and Risk

Microchip Technology has a beta of 1.52, suggesting that its share price is 52% more volatile than the S&P 500. Comparatively, OSI Systems has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500.

Valuation & Earnings

This table compares Microchip Technology and OSI Systems”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Microchip Technology	$7.63 billion	4.02	$1.91 billion	$1.43	39.95
OSI Systems	$1.54 billion	2.10	$128.15 million	$7.66	25.27

Microchip Technology has higher revenue and earnings than OSI Systems. OSI Systems is trading at a lower price-to-earnings ratio than Microchip Technology, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

91.5% of Microchip Technology shares are owned by institutional investors. Comparatively, 89.2% of OSI Systems shares are owned by institutional investors. 2.1% of Microchip Technology shares are owned by company insiders. Comparatively, 5.2% of OSI Systems shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and target prices for Microchip Technology and OSI Systems, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Microchip Technology	1	4	13	0	2.67
OSI Systems	0	0	5	0	3.00

Microchip Technology presently has a consensus price target of $84.00, suggesting a potential upside of 47.05%. OSI Systems has a consensus price target of $209.40, suggesting a potential upside of 8.16%. Given Microchip Technology’s higher possible upside, equities analysts plainly believe Microchip Technology is more favorable than OSI Systems.

Summary

Microchip Technology beats OSI Systems on 11 of the 14 factors compared between the two stocks.

About Microchip Technology

Microchip Technology Incorporated engages in the development, manufacture, and sale of smart, connected, and secure embedded control solutions in the Americas, Europe, and Asia. The company offers general purpose 8-bit, 16-bit, and 32-bit mixed-signal microcontrollers; 32-bit embedded mixed-signal microprocessors; and specialized microcontrollers for automotive, industrial, computing, communications, lighting, power supplies, motor control, human machine interface, security, wired connectivity, and wireless connectivity applications. It also provides analog, interface, mixed signal, and timing products comprising power management, linear, mixed-signal, high-voltage, thermal management, discrete diodes, and metal oxide semiconductor field effect transistors (MOSFETS), radio frequency (RF), drivers, safety, security, timing, USB, Ethernet, wireless, and other interface products; field-programmable gate array (FPGA) products; and application development tools that enable system designers to program microcontroller, FPGA, and microprocessor products for specific applications. In addition, the company offers serial electrically erasable programmable read-only memory, serial flash memories, parallel flash memories, serial static random access memories, and serial electrically erasable random access memories for the production of very small footprint devices; and licenses its SuperFlash embedded flash and non-volatile memory technologies to foundries, integrated device manufacturers, and design partners for use in the manufacture of microcontroller products, gate array, RF, analog, and neuromorphic compute products that require embedded non-volatile memory, as well as provides engineering services. Further, it offers wafer foundry and assembly, and test subcontracting manufacturing services; and timing systems products, application specific integrated circuits, and aerospace products. The company was incorporated in 1989 and is headquartered in Chandler, Arizona.

About OSI Systems

OSI Systems, Inc. designs and manufactures electronic systems and components. It operates in three segments: Security, Healthcare, and Optoelectronics and Manufacturing. The Security segment offers baggage and parcel inspection, cargo and vehicle inspection, hold baggage and people screening, radiation monitoring, explosive and narcotics trace detection systems, and optical inspection systems under the Rapiscan name. It also provides site design, installation, training, and technical support services; and turnkey security screening solutions under the S2 name. The Healthcare segment offers patient monitoring, cardiology and remote monitoring, and connected care systems and accessories under the Spacelabs name for use in critical care, emergency, and perioperative areas within hospitals, physicians' offices, medical clinics, and ambulatory surgery centers. The Optoelectronics and Manufacturing segment provides optoelectronic devices under the OSI Optoelectronics, OSI LaserDiode, OSI Laserscan, and Advanced Photonix names for the aerospace and defense, avionics, medical imaging and diagnostics, biochemistry analysis, pharmaceutical, nanotechnology, telecommunications, construction, and homeland security markets. It also offers electronics manufacturing services to original equipment manufacturers and end users for medical, automotive, defense, aerospace, industrial, and consumer applications under the OSI Electronics, APlus Products, Altaflex, and PFC Flexible Circuits names; LCD displays for medical, industrial, and consumer electronics applications; and flex circuits for OEM customers. This segment offers laser-based remote sensing devices to detect and classify vehicles in toll and traffic management systems under the OSI Laserscan and Autosense names; and solid-state laser products for aerospace, defense, telecommunication, and medical applications under the OSI LaserDiode name. The company was incorporated in 1987 and is headquartered in Hawthorne, California.